USD/CHF recovers from two-week lows, trades above 0.9650 ahead of US data

• US Dollar Index rebounds to mid-99s on Wednesday.
• Major European equity indexes fall on Wednesday as risk-aversion returns.
• Coming up: Retail Sales and Industrial Production data from US.

The USD/CHF pair dropped below the 0.9600 mark for the first time in two weeks on Tuesday but staged a recovery on Wednesday boosted by the broad-based USD strength. As of writing, the pair was up 0.62% on the day at 0.9659.

The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, closed the previous four days in the negative territory as the upbeat market mood made it difficult for the USD to find demand. With the risk rally losing its stream on Wednesday, the DXY recovered its weekly losses and was last seen adding 0.75% on a daily basis at 99.58.

Eyes on US data

In the second half of the day, Retail Sales and Industrial Production data from the US will be looked upon for fresh impetus. If the data come in worse than expected, the USD could continue to gather strength against its peers. 

Previewing the Retail Sales data, “we are projecting an eye-catching 7.5% m/m drop in the headline number for March, which would beat the largest decline on record at -6.5% in January 1987,” said TD Securities analysts. “Although a good chunk of the decline in total sales is likely to be explained by tumbling auto sales, we expect the headline ex-auto segment to also post a significant decline (-5.0% m/m).”

Meanwhile, major European equity indexes are erasing more than 2% on Wednesday and the US stock index futures are down between 1.3% and 1.9% to reflect the risk-averse market environment.

Technical levels to watch for